back to article Eggheads: Cities, don't woo rich Amazon with sweetheart HQ deals

A handful of university professors are calling on the mayors of US cities to let common sense prevail and refrain from offering Amazon tax cuts and other incentives for its new campus. The change.org petition, crafted by University of Toronto professor Richard Florida and signed by professors from Harvard, MIT, and UC Berkeley …

It's the jobs

Never mind that the benefit is to Amazon, not Bezos directly (granted, he will benefit), the main benefit I see is the promised jobs. Yes, it will cost the city and county, but if they do not pass a significant amount to their citizens via taxes, it might be worth doing.

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Headmaster

Re: It's the jobs

Well, if the new headquarters are in Dallas or Austin Texas, they won't have to give any tax cuts because taxes are already so damn low here (property taxes and bond issues pay for almost everything).

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Re: It's the jobs

Yes, it will cost the city and county, but if they do not pass a significant amount to their citizens via taxes, it might be worth doing.

It's a gamble and those entities have several things being dangled in their faces.... for example "up to 50,000 jobs" so unemployment might/will drop and there is employee taxes, spending, etc. to happen. We won't get into if Amazon actually will pay a living wage those "up to 50,000". So, there's also "votes" for those city and state "fathers" who are bringing this prosperity to the populous.

But they won't talk about things like more traffic congestion, etc., only the benefits. Yes, it can be a good thing for a city/county/state. It can also be a hidden time bomb that will come back to bit them later.

Everyone wants a miracle, two chickens in every pot, etc.... Not everyone (most?) will only get maybe half a chicken....

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You see the same idiocy when new sports teams are created with tax payers footing the bill for the stadiums. Or to keep sports teams (cough Raiders cough). Here in Hell (Fresno), CA we have endless "investments" in "revitalizing" downtown.

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I'd rather have Amazon's HQ2 than a sports team any day. Revenue from a sports team is only during a limited time of the year, unlike the employees at a company, and at ~50,000 heads, even the largest of tax breaks is likely to be recouped (as well as all of the other jobs that will come to support Amazon or simply to be close to them).

I will also note that these profs are all from cities that either didn't make the cut or are unlikely to win.

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Anonymous Coward

tax payers footing the bill for the stadiums

St Louis has a nice football stadium.

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How do they get away with it?

Surely a state-financed bung like that is essentially "socialism", or at the very least a gross market distortion? I would have expected Amazon competitors to cry foul and demand equal treatment. That's partly why the (Commie, Pinko) EU has "illegal state aid" rules.

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Angel

Re: How do they get away with it?

> Surely a state-financed bung like that is essentially "socialism" [ ... ]

Corporate socialism. We've been doing that since the '90's. It's still very much in fashion. Bill Clinton invented it, Obama perfected it.

Capitalism is for the little people.

I'm willing to bet that the notional value of the tax + land incentives is orders of magnitude greater than the tax revenue collected from the jobs created. Which means the tax incentives aren't subsidizing job creation, they're subsidizing Bezos directly, at a net fiscal loss for the community.

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Re: How do they get away with it?

Bill Clinton invented it,

He did NOT.

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Re: How do they get away with it?

It's pure crony capitalism, not some form of socialism. Also quite old.

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Re: How do they get away with it?

Well see, that's the problem with people who think they know history. They know only recent history that (they think) proves their point. If you know even a little history but with breadth of time, we're just repeating ourselves.

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Re: How do they get away with it?

> It's pure crony capitalism, not some form of socialism.

Crony capitalism is a subset of corporate socialism. Crony capitalism is mostly concerned with a mutually beneficial and profitable ecosystem between individuals. It's mostly a form of corruption.

Corporate socialism is crony capitalism + corporate social welfare. Not only preferential tax rates for business buddies, but also guaranteed bailouts in case of trouble, paid for by taxpayers.

It was Bill Clinton who deregulated the financial markets in the '90's. W. introduced corporate socialism with the bailout of 2008, which Obama continued.

See Financial Crisis of 2008 and the subsequent bailout, which were unlike anything in the past.

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Re: How do they get away with it?

Corporate socialism. We've been doing that since the '90's. It's still very much in fashion. Bill Clinton invented it, Obama perfected it.

My real question was why organisations Amazon competes with who don't get these state subsidies don't sue and win?

If there is no equal treatment provision in this area of US law, that implies that the Government is free to rig any sector by differential taxation. You don't like Apple encryption policies? Impose a huge cellphone tax and then give specific breaks to Android vendors. That sort of thing is legal !?

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Re: How do they get away with it?

they're subsidizing Bezos directly, at a net fiscal loss for the community.

They are subsidizing the reelection of the politician who "Made WhereverVille Great Again" and "Created Jobs" - in 10 years when the audits show that they lost $M/job it will be small print on page 7

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Re: How do they get away with it?

> My real question was why organisations Amazon competes with who don't get these state subsidies don't sue and win?

> the Government is free to rig any sector by differential taxation

I don't believe there is an equal protection clause for tax rates. Amazon will still pay taxes, just like anyone else. Their tax rate will be 0.001%.

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Re: How do they get away with it?

If you think Clinton invented it, read the history of the transcontinental railroad. Or the electrical industry. Tax and land incentives to private concerns go back to the road and canal system in the 1820s.

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Re: How do they get away with it?

And if you read what I actually wrote instead of what you think I wrote, I wasn't talking about tax and land incentives exclusively. I was talking about our current system of corporate welfare socialism, which is much more complex and corrupt than the tax and land incentives from 1820.

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Re: How do they get away with it?

It is not socialism, it is the opposite of socialism. Socialism is the practice of collecting funds that are then re-distributed among the population to even wealth and services distribution. The proposed tax cuts are the *exact opposite* of that. The tax cuts are a promise to alleviate one company of taxes in the *hope* of receiving other benefits from their entry into the local market. The distribution of wealth and services is a secondary *possible* benefit that is not guaranteed. The outflow from the common purse is a guaantee.

It is not socialism, it's a market distortion.

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Re: How do they get away with it?

ST for president.

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Re: How do they get away with it?

It is not socialism, it is the opposite of socialism. Socialism is the practice of collecting funds that are then re-distributed among the population to even wealth and services distribution. The proposed tax cuts are the *exact opposite* of that.

I meant quasi-socialist in the sense that it is the subsidization of a protected class by levying taxation on the rest of the population. The bizarre part is that a multi-billion dollar corporation, owned by a billionaire is the protected class!

I'm still astounded that this is legal. I always assumed that the state would be compelled to treat everyone equally via a combination of Corporate Personhood and the 14th Amendment and even if the first part failed, the rights of the shareholders (of competing companies) would come into play. Presumably, they get away with it using the same sort of arguments they use for "Eminent Domain".

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Bill Clinton invented it,

I'm pretty sure the pyramids and the Tower of Babel are monuments to crony capitalism.

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Re: How do they get away with it?

corporate welfare bum a term coined in 1972 by Canadian labour leader and politician David Lewis (1909-1981). No slight was intended towards hobos, I am sure.

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Re: It's the jobs

but if they do not pass a significant amount to their citizens via taxes, it might be worth doing

if And where does the money come from if not via taxes?? There is no magic money tree. The state has only one source of income and that's taxation.

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Re: It's the jobs

> There is no magic money tree.

Shhh.. those are the magic words that make £1 billion suddenly appear. We don't want to wear out that tree.

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Anonymous Coward

The state has only one source of income and that's taxation.

But they are starting to get creative with asset forfeiture and punitive fines.

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Anonymous Coward

Quid pro quo

You pay your taxes fully and we will consider business benefits within the law.

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Big Brother

To support such an individual?

Jeff Bezos is a whip master who drives his Amazon employees into the ground. Bribing Bezos into your city just says you support that behavior and are willing to do the same to your voters.

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Monorail

Obligatory video.

Bezos is in the straw hat.

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Re: Monorail

Dag nabbit you beat me to it.

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Game theory

Says there is no way 20 cities will agree not to give incentives. It would be hard for two to agree on that and not go back on their word, in fact.

Plus if they really did so, Amazon could and probably would say "turns out none of our finalists met our criteria, so we are considering the additional cities in the following list". It would be a "lesson" to them to provide the giveaways corporate America thinks it is entitled to, and insure the next crop wouldn't make such an agreement.

The only way around this is to pass laws banning the practice, and it would have to be done at a national level otherwise it would be in the interest of states to drag their feet on doing so to give them an advantage over states that went first.

This ought to be a position all conservatives support, if they are true to their position about being against "welfare" and government interference in private markets. Funny how so few of them speak up about this...

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Re: Game theory

At least 3 cities, Dallas, Nashville and Toronto, didn't offer any financial incentives. Some of the bids were not made public so we don't know if there are others. But I doubt it, I expect a sealed bid would almost always include financial incentives, that's what they are trying to hide.

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Re: Game theory

Denver flat out does not want it. Even the Governor is not really thrilled at the prospect. Remember Colorado flat out refused the Olympics in 1976. I don't even know Bozos has it on the list given past history.

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Anonymous Coward

Denver flat out does not want it.

I think the powers that be in Denver were focused on making it legal to defecate on the street. You can only handle so much change at one time.

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Taxes

Speaking as a resident of one of the most highly taxed States (NJ) the tax abatement are in the form of Property Taxes. In my town several years ago, we had a spate of building and both Home Depot and Walmart came into town. The portion of abatement we gave a break on were the TOWN PORTION of property taxes. Even if fully taxed, it only account for ~$20k per year.... hardly a Kong’s ransom. I see MANY of my local neighbors working in Jesé places. Also, both entities have contributed MUCH more than what they would have paid in the form of donations... having built/improved our parks and donations made to many worthy causes that benefit everyone in our town. So, depending on what is given to Amazon, I am sure their community investment AND the jobs it will bring FAR outweigh the concessions given. That is based on my direct experience in my town.

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Re: Taxes

I hear New London, Connecticut didn't make out so well with the Pfizer deal once the tax breaks expired. Hopefully the Amazon deal won't be another Kelo type mess.

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Offer incentives that make the city better.

As a resident of one of the finalist cities (Columbus, OH) I would love to see an offer that includes infrastructure that the city needs anyway as opposed to just massive tax breaks. With the inevitable disruption of adding HQ2, we would need to spend on water and sewage, emergency services, schools, roadways, etc. Many of these are needed anyway (especially a reliable public transit system that serves the entire city, as COTA is spotty especially in neighborhoods that need public transit and would likely provide a significant portion of warehouse and semi-skilled workers). I'd rather make the farm work instead of giving it away.

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Anonymous Coward

Re: Offer incentives that make the city better.

As a resident of one of the finalist cities (Columbus, OH) I would love to see an offer that includes infrastructure that the city needs anyway as opposed to just massive tax breaks

Great idea. The city can pay to build infrastructure, then sell it at a fraction of the cost to Amazon to rent back to you.

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When the tax breaks end, Amazon will Flee

Happens all the time. Companies like Verizon promise thousands of jobs, if only those pesky taxes didn't get in the way. Local community passes a deferred tax agreement. Verizon builds a call center, operates for a few years tax-free. Tax agreement ends, and oh look, Verizon moved.

If you PAY the company to move to your city, they won't have any problem getting someone else to pay them to move later.

As others have pointed out, multi-billion dollar sports franchises do it all the time.

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If you PAY the company to move to your city, they won't have any problem getting someone else to pay them to move later.

That why San Antonio didn't submit a bid. I think we're still a bit upset that AT&T moved to Dallas.

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Anonymous Coward

I think we're still a bit upset that AT&T moved to Dallas.

St Louis is still a little upset that Southwestern Bell moved to San Antonio. Because the CEO wasn't allowed to join the country club he wanted to.

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Re: I think we're still a bit upset that AT&T moved to Dallas.

St Louis is still a little upset that Southwestern Bell moved to San Antonio. Because the CEO wasn't allowed to join the country club he wanted to.

You're quite correct, I'd rather forgotten about that... and I have no excuse as I actually wrote a paper about the history and future of SBC in 2001, back in business school.

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Anonymous Coward

giving tax breaks to the world's richest man

Well, the breaks would be given to Amazon, the corporation - not Bezos. And a lot of people in the area would get jobs and then pay taxes.

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